Field of the Disclosure
The present disclosure relates to electronic transaction processing. More specifically, the present disclosure is directed to method and system for providing standardized or cleansed data identifying the merchant involved in a transaction as part of the clearing record of that transaction.
Brief Discussion of Related Art
The use of payment devices for a broad spectrum of cashless transactions has become ubiquitous in the current economy, accounting for hundreds of billions of dollars in transactions during 2010 alone. The process and parties involved can be visualized for example as presented in FIG. 1, and can be thought of as a cycle, as indicated by arrow 10. A device holder 12 may present a payment device 14 to a merchant 16 as payment for goods and/or services. For simplicity the payment device 14 is depicted as a credit card, although those skilled in the art will appreciate the present disclosure is equally applicable to any cashless payment device, for example and without limitation contactless RFID-enabled devices including smart cards, NFC-enabled smartphones, electronic mobile wallets or the like. The payment device 14 here is emblematic of any transaction device, real or virtual, by which the device holder 12 as payor and/or the source of funds for the payment may be identified.
In cases where the merchant 16 has an established merchant account with an acquiring bank (also called the acquirer) 20, the merchant communicates with the acquirer to secure payment on the transaction. An acquirer 20 is a party or entity, typically a bank, which is authorized by the network operator 22 to acquire network transactions on behalf of customers of the acquirer 20 (e.g., merchant 16). Occasionally, the merchant 16 does not have an established merchant account with an acquirer 20, but may secure payment on a transaction through a third-party payment provider 18. The third party payment provider 18 does have a merchant account with an acquirer 20, and is further authorized by the acquirer 20 and the network operator 22 to acquire payments on network transactions on behalf of sub-merchants. In this way, the merchant 16 can be authorized and able to accept the payment device 14 from a device holder 12, despite not having a merchant account with an acquirer 20.
The acquirer 20 routes the transaction request to the network operator 22. The data included in the transaction request will identify the source of funds for the transaction. With this information, the network operator routes the transaction to the issuer 24. An issuer 24 is a party or entity, typically a bank, which is authorized by the network operator 22 to issue payment cards 14 on behalf of its customers (e.g., device holder 12) for use in transactions to be completed on the network. The issuer 24 also provides the funding of the transaction to the network provider 22 for transactions that it approves in the process described. The issuer 24 may approve or authorize the transaction request based on criteria such as a device holder's credit limit, account balance, or in certain instances more detailed and particularized criteria including transaction amount, merchant classification, etc., which may optionally be determined in advance in consultation with the device holder and/or a party having financial ownership or responsibility for the account(s) funding the payment device 14, if not solely the device holder 12.
The issuer 24 decision to authorize or decline the transaction is routed through the network operator 22 and acquirer 20, ultimately to the merchant 16 at the point of sale. This entire process is typically carried out by electronic communication, and under routine circumstances (i.e., valid device, adequate funds, etc.) can be completed in a matter of seconds. It permits the merchant 16 to engage in transactions with a device holder 12, and the device holder 12 to partake of the benefits of cashless payment, while the merchant 16 can be assured that payment is secured. This is enabled without the need for a preexisting one-to-one relationship between the merchant 16 and every device holder 12 with whom they may engage in a transaction.
The authorization may also be separate in time from the consummation of the transaction. In some cases, an authorization will be taken by a merchant 16, but payment is not made until goods are delivered or the services performed some time later. In any case, on a periodic basis, e.g., daily, the merchant 16 will submit a batch of completed and authorized transactions to the acquirer 20 to receive payment. The acquirer will in turn look to the network operator for payment in a process called “clearing”. The clearing records, or list of cleared transactions including data relevant thereto in form and content specified by the network operator 22, is transmitted to the issuer 24.
The issuer 24 may then look to its customer, e.g., device holder 12 or other party having financial ownership or responsibility for the account(s) funding the payment device 14, for payment on approved transactions, for example through an existing line of credit where the payment device 14 is a credit card, or from funds on deposit where the payment device 14 is a debit card. The issuer 24 will prepare a periodic statement 26 listing transactions on the account of a device holder 12, including merchant data as provided by the network operator 22.
One problem that arises is poor quality of the data received from an acquirer 20, particularly where the merchant 16 is separated from the acquirer 20 by a third party payment provider 18. An estimated 13-14MM dispute cases are opened each year, where the device holder 12 Does Not Recognize (or “DNR”) the merchant 16 listed on their billing statement 26. At an industry average of $25 per claim, case resolution costs the industry approximately $350 MM per year.
These estimates do not include the call center costs of the initial phone call from the device holder 12, call time with a dispute specialist prior to opening the case, and write-offs undertaken by the issuer 24 when the transaction amount does not reach a certain threshold. Therefore, improvement in merchant data quality will further be of tangible benefit to customer-service call centers involved in cashless transaction processing by reducing the number of calls and their associated costs, regardless of which entity on the transaction processing chain is operating the call center (including third-party outsourced providers).
Furthermore, improvement in merchant data quality will be of benefit to the acquirers 20 where they do not have direct control over the merchant data quality, for example in the cases where the merchant 16 is separated from the acquirer 20 by a third party payment provider 18. For example, improvement in data quality may facilitate processing return authorization messages received from the network operator 20, or in their settlement clearing of processed transactions.
In addition to the above-described benefits, among others, to the various parties to the processing of the cashless transaction according to the instant disclosure, valuable benefits accrue to the network operator 20 as well. The network operator may see its own call center costs reduced corresponding with the number of DNRs. In addition, reduced DNRs may lead to reduced chargeback requests, which necessarily interrupt the ordinary transaction flow and are a source of dissatisfaction to merchants 16, among others. The improvement of service level to all involved in the cashless transaction chain according to the present disclosure further inures to the benefit of the network operator 20.
Some sources of poor merchant data quality include                Merchants 16 shift between acquirers 20;        Several merchants 16 may be partnered with multiple acquirers 20;        Merchant 16 DBA Name, City Name, and Address include non-standard abbreviation variations;        Acquirer 20 has a data integrity deficit identifying one or more merchants 16;        One or more acquirers 20 interpret the network operator's 22 reporting guidance differently from their peers; or        Acquirers 20 are not obligated to tell a network operator 22 when they make changes or reassign merchant identifiers.        
Two main characteristics of “poor quality” merchant data are
1. Incomplete Information—Acquirers 20 leaving key data fields blank; and
2. Inaccurate Information—Wrong data supplied by acquirers 20 either by mistake or interpretation.
A solution to this apparent data deficit problem remains wanting.